Arizona’s working class needs to learn financial literacy, NOW!

Arizona’s working class needs to learn Financial Literacy, NOW!

Cade Speroni

Arizona State University

Arizona’s working class needs to learn financial literacy, NOW! 2

Abstract

In this paper I discuss how the lack of financial literacy in Arizona effects our young

working class, primarily focused towards individuals from ages 17-25. I argue that due to the

lack of financial literacy the working class is forced to live paycheck to paycheck and further

themselves from the wealthy. I provide examples of how financial literacy benefits our lives and

how the lack of it can be detrimental.

Arizona’s working class needs to learn financial literacy, NOW! 3

Arizona’s poverty rating is over 6% high than the national average among working age

individuals, ages 18-64, according to a local news group Tucson.com (Howard Fischer Capitol

Media services, 2010). Arizona’s poverty rating sits at a very high 18.4%, that is almost one fifth

of the working age individuals! Why is this? Is this due to lack of jobs, over population, low

minimum wage? I argue that it is directly caused by the lack of financial literacy and financial

education of our working class. Our young Arizonans (ages 17-25) need to be taught how to

manage money so that they can be prepared for success and we can all live better, happier,

lives.

According to research performed by CNN money back in 2013 76% of Americans are

living paycheck to paycheck.

Living paycheck to paycheck is

no way to live and we show all

strive to break free from this

norm. Imagine being so

financially comfortable that you

own your car, your furniture,

your mattress, your house, and

everything else in your life.

Imagine being able to go on vacation and not having to bury yourself in debt just to pay for that

trip over the next few years or being buried by your credit card debt with the crippling interest

rate of 30%. Imagine if your transmission goes out on your car or if you need to buy a new roof

for your home, and you can write a check for the repairs, paid in full. Doesn’t that sound like a
Arizona’s working class needs to learn financial literacy, NOW! 4

dream? That life style is NOT only reserved for the millionaires or movie stars, that can be your

life too. To be able to live like this you must learn how to manage your money, your income,

and investments. Preparing for the events life throws at you is possible. Now a lot of people will

argue “Well I can’t afford to save money like that” well this is where I argue you can’t afford

NOT to save! A quote from Dave Ramsey, financial educator and author of The Total Money

Makeover, “To live like no one else, you must live like no one else”.

Being able to manage your money can allow you to prepare for emergencies that life

might throw at you. That would essentially remove one of the largest stressors in your life.

Reducing stress will help you live a longer and happier life. Stress is hard on the human body

and can lead to medical problems or worsten exsisting ones. Stress is also hard on marriges. A

study preformed by Dave Ramsey and his team in Febuary 2018 completely analyzes how

money and marriages influence one another. Ramsey found that 41% of couples argued about

debt/finances more than anything else. “In comparison, only 25% of couples who are debt-free

say they argue about money. Plus, money doesn’t even make the top-five list of things debt-

free couples argue about” (Ramsey, D. 2018, February 7). Debt is crippling marriages in Arizona!

Here is a quote from AZ Big Media who preformed a study in Arizona on our divorce rate and

the numbers are shocking!

“Nationally, the divorce rate for those who are in their first marriage is approximately 41%-50%. 

The divorce rate goes up significantly for individuals who are in a second or third marriage. 

Statistics indicate approximately 60% to 67% of second marriages fail; 73% to 74% of third

marriages end in divorce.

Arizona’s working class needs to learn financial literacy, NOW! 5

Where does Arizona rank nationally when it comes to divorce?  It turns out that Arizona has one of

the highest divorce rates in the country.  According to a 2011 study by the U.S. Census Bureau

approximately 10.8 out of every 1000 Arizona men got divorced the prior year; the national average

for men is 9.2 per 1000.  The divorce rate for Arizona women is even higher at 11.9 out of every

thousand women.  The national average for women is 9.7 per 1000.

Based on these numbers, Arizona had the 10th highest divorce rate in the country.” (Jensen, K.

2017, August 20).

Taking control over your finances is absolutely necessary and you must do it now! Not

managing your money and carrying debt inhibits your ability to build wealth!

The average amount spend on credit card

interest PER YEAR is $2,630 (Ramsey, D 2015), that

does not include car debt, mortgages/rent, or

student loans! The formula to build wealth is a

simple one that has seemed to have been forgotten.

Todd Tresidder is a financial mentor and author who

also runs a very popular website

Financialmentor.com has created theses simples

steps (see image right) to building wealth. A common

theme you will see from any financial investor or

money management expert is addressed in

Tresidders first step, and it is the first step in ALL

Arizona’s working class needs to learn financial literacy, NOW! 6

wealth building plans; to spend less! It is simple math that is always over looked. You MUST

spend less than you earn in order to have surplus. It is all too often that we spend more than

we earn, and this is easily done using debt. Dave Ramsey addresses debt as “Debt is dumb” and

“Debt simply comes from buying things you cannot afford”. The largest debt that young

working-class Arizonans have is their car payment. I think this is the largest financial mistake

that we all take and never get away from. Watch this video titled: “How to drive free cars for

LIFE!” https://www.youtube.com/watch?

v=BKyV8CTHeJ0&index=19&list=FL8tajlC1e2eB9gqG8mS6rSQ

Dave Ramsey and his team developed this video and its addresses how detrimental car

payments and debts can be when it comes to building wealth.

I took a short survey of three individuals from my focus group, young working class (17-

25) individuals. I have posted them at the end for you to review. What I found is that for the

first question 66% of them admit to having limited understanding of finances. It seems that the

majority were not comfortable, nor experienced with the basic understanding of financial

literacy. The same percentage results came in for question 2. Two individuals answered that the

wealthy can hire financial experts or at least have financially literate advisors they can talk to

and gain advice from. These advisors could be family, friends, or colleagues. Robert Kiyosaki

addresses this issue in his Book Rich Dad Poor Dad written in 1997. In his book he focuses on

lessons the wealthy teach their families that the poor and middle class do not! Kiyosaki goes

over a wide range of financial tools that the wealthy use to take advantage of tax breaks,

investments, and even their viewpoint on money and careers. “Rich Dad Poor Dad: What the

rich teach their kids about money that the poor and middle class Do Not!” is a best-selling book
Arizona’s working class needs to learn financial literacy, NOW! 7

and has been analyzed a numerous financial advisors, mentors, and investors. Danielle Meyer

wrote a newspaper article reviewing that book, “’rich dad, poor dad’ forces readers to think

proactively about finances” and that is essential to changing that habit of living paycheck to

paycheck. When you proactively think about managing your own money you discover how to

make your money work for you. You can prepare yourself for retirement and financial

emergencies that life WILL throw at you. If you think about a company that didn’t proactively

manager their finances, you wouldn’t expect them to prosper. If a company failed to manager

their income to be greater than their expenses they would go bankrupt. If that company didn’t

maximizing their investments, like employees or equipment, they couldn’t succeed. The same

goes for personal finances, so why is it that our young working class Arizonans fail to adhere to

these same principles? It is all to normal to fall into debt, take out huge loans, and finance non-

essential things. I argue that it is due to the lack of financial literacy and education of Arizonans

ages 17-25 and it is time for a change! I took the pulse of this community with a survey of three

questions to gauge their financial literacy and find the holes in their financial education.

When reviewing these three questions all participates admitted to savings and doing

some form of tracking and/or budgeting monthly. This is a great to find out because savings and

budgeting is an essential tool to use! To truly be successful these individuals can maximize their

savings through their budget. Based on the responses I believe that these individuals have a

good foundation to financial literacy. When talking about their budget and savings none of

them mentioned they were savings with any intended purpose, and none admitted to having

any form of retirement or investment accounts. So, there is still a lot of room to grow and I

believe that comes from the individuals lacking of complete financial literacy. Robert Kiyosaki
Arizona’s working class needs to learn financial literacy, NOW! 8

discusses in his book that when making financial plans, like savings, you need to set a specific

goal. Intending to save for some arbitrary amount is not good enough, you will fail to meet the

amount you actually need or you will exceed that number and waste potential financial gain.

Admitting to only having a basic understand of investment tools is hurting their potential to

grow their wealth.

To gain better understanding of their financial situation and specific areas to improve,

we would need to know more details of their debt, income, long term and short-term financial

goals. Going through these steps would teach them an immense amount of financial

knowledge! These are skills you can teach yourself by learning from financial leaders through

their websites, books, or even workshops. All participates mentioned in question two of the

survey that the wealthy people had someone to help and advice him or her in financial

decisions. The participates need to take ownership of their finances and learn that information

for themselves, they can be their own advisors! There are many tools and people out there

giving this information.

You can argue that minimum wage or low-income jobs are the true problem to wealth

inequality and the big divide between the middle class and the rich. Although, I disagree there

are countless stories of lottery winners who were flat broke, won millions of dollars, and a few

years later file for bankruptcy. In all of these situations the problem was not the lack of money

it was the lack of financial literacy. Never having that much money before the lottery winners

failed to learn how to handle their money properly. The winners did not have a specific goal for

their money therefore they did not prepare for their future and over spent. There never gave

themselves an opportunity to allow their money to work for them due to their lack of financial
Arizona’s working class needs to learn financial literacy, NOW! 9

literacy. Had they already processed financial literacy they would have be able to live an

extravagant stress free life and left a financial legacy for their children’s children. Another

argument to blame wealth inequality is due to predatory lending companies. Across the united

state you will pay day lenders, pawnshops, and high interest property loans in low-income

neighborhoods. Although I agree that this is not a coincidence and there are predatory lenders

targeting low-income individuals to take advantage of their financial situations. I argue that

these lenders would not have a market to advantage of if everyone were financially literate,

regardless of their income or neighborhood. These individuals would be able to see the scams

and oppressive terms predatory lends create and avoid them. The lenders would be forced to

give better terms and the low-income (and now financially literate) individuals would be

encourage to value their credit and finances more.

The most difficult part to overcome is planting the seed in someone head to want this

information. Giving that person the thirst for knowledge and to realize there are better ways to

live other than paycheck to paycheck. This will allow them to grow to a fulfilling and happier life

by using their financial literacy skills.

Arizona’s working class needs to learn financial literacy, NOW! 10

Field Research Questions

Field Research 1
AGE: 23
SEX: Male
1. Do you feel knowledgeable about finances and/or investment tools? (Bank loans,
interest rates, stock investing, etc.)

Yes, I feel very knowledgeable.

2. Do you feel the rich know more about money than you, or the fact that they already
have money makes it easier to earn more?

I do not feel like they know more than me unless they worked their way to have money
from being poor. The fact they already have money makes it easier for them to earn
more.

3. Do you budget and track your monthly spending or track your investments/retirement
accounts? (Investments can be; home value/equity, debt to income ratio, car value, etc.)

Yes, I do budget and track them every month.

Arizona’s working class needs to learn financial literacy, NOW! 11

Field Research 2

AGE: 23

SEX: Male

1. Do you feel knowledgeable about finances and/or investment tools? (Bank loans, interest rates,
stock investing, etc.)

I feel that I have a very basic understanding of finances and investment.

2. Do you feel the rich know more about money than you, or the fact that they already have
money makes it easier to earn more?

I feel that some people who are rich, are so because they understand smart ways to save and invest. I
feel some people that our rich hirer others to do their finances, because they do not know how to do it,
which may help them be more financial successful.

3. Do you budget and track your monthly spending or track your investments/retirement
accounts? (Investments can be; home value/equity, debt to income ratio, car value, etc.)

I do budget my spending and track it as well. I also track my savings.

Arizona’s working class needs to learn financial literacy, NOW! 12

Field Research 3

AGE: 25

SEX: F

1. Do you feel knowledgeable about finances and/or investment tools? (Bank loans, interest rates,
stock investing, etc.)

I think I know about interest rates but I know there are a lot other things out there I am not
aware of.

2. Do you feel the rich know more about money than you, or the fact that they already have
money makes it easier to earn more?

I think they know more about money and they have people around them that will help them
who have experience.

3. Do you budget and track your spending or track your investments/retirement accounts? If so
how often? (Investments can be; home value/equity, debt to income ratio, car value, etc.)

No not really, I don’t have any retirement set up and I just try to save.
Arizona’s working class needs to learn financial literacy, NOW! 13

References

Jensen, K. (2017, August 20). What are Your Chances of Ending Up Divorced in AZ? Retrieved

July 16, 2018, from https://azbigmedia.com/chances-divorce-az/

Money, Marriage, and Communication - from Ramsey Solutions Research. Retrieved July 16,

2018, from https://www.daveramsey.com/research/money-marriage-communication)

Ramsey, D. (2013). The total money makeover: A proven plan for financial fitness. Nashville,

Tenn.: Nelson.

Ramsey, D. (1997). Financial Peace. Nashville, Tenn.: Nelson.

Kiyosaki, & Lechter. (1998). Rich dad, poor dad : What the rich teach their kids about money--

that the poor and middle class do not! Paradise Valley, Ariz.: TechPress.

Danielle Meyer. (2013, December 01). REVIEW: 'Rich Dad, Poor Dad' forces reader to think

proactively about finance. Grand Forks Herald (Grand Forks, ND), p. Grand Forks Herald

(Grand Forks, ND), Dec 1, 2013.

http://bi.galegroup.com.ezproxy1.lib.asu.edu/global/article/GALE

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